Trump's White House negotiations failed, the US government shutdown began, and gold prices broke through $3,800.

With less than two days until funding runs out, US President Trump's White House talks with bipartisan congressional leaders failed to break the deadlock. Concerns about uncertainty, coupled with a weaker dollar, pushed gold prices higher. Goldman Sachs said that if the government shutdown continues, the September non-farm payroll report is likely to be released later than scheduled at 8:30 a.m. on Friday, potentially delaying the Federal Reserve's planned October interest rate cut.

With less than two days left before the US government shutdown, key bipartisan congressional funding negotiations failed. Market anxiety over this political impasse has pushed gold prices above $3,800 per ounce.

On Monday, September 29th, US President Trump's White House talks with bipartisan congressional leaders failed to break the deadlock. The federal government's existing funding will officially run out at 12:01 a.m. local time on Wednesday. If no agreement is reached by then, a government shutdown will inevitably lead to furloughs for hundreds of thousands of federal employees and disruptions to public services. After the negotiations concluded, both sides maintained a hardline stance and exchanged accusations. Vice President J.D. Vance warned that the United States was "heading for a shutdown" and accused Democrats of holding the government "hostage." Senate Minority Leader Chuck Schumer countered that the decision on a shutdown lay with Republicans, that Democrats had made recommendations to the president, and that "the ultimate decision maker is Trump."

Concerns about uncertainty in the U.S. political system, coupled with a weakening dollar, pushed gold, a traditional safe-haven asset, above $3,800 per ounce on Monday morning, September 29.

Goldman Sachs said the stock market's biggest concern is the potential delay in the release of non-farm payroll data due to a government shutdown. If a government shutdown occurs, the September non-farm payroll report is likely to be delayed as scheduled at 8:30 a.m. on Friday, October 3, potentially delaying the Federal Reserve's planned October interest rate cut.

Negotiations Broke Down, with Both Parties Blaming Each Other

With less than two days until funding ran out, Trump and Vice President J.D. Vance met with Republican Senate Majority Leader John Thune, House Speaker Mike Johnson, and Democratic Senate Minority Leader Chuck Schumer and House Minority Leader Hakeem Jeffries, but no agreement was reached.

Jeffries described the discussion as "frank and direct." Republican lawmakers had previously proposed a short-term deal, known as a "Continuing Resolution," to extend existing funding levels until November 21st to buy more time for negotiations.

But Democrats refused to endorse it, insisting that any agreement must include an extension of health insurance subsidies set to expire at the end of the year. Jeffries emphasized, "Democrats are fighting to protect health care for the American people, and we will not support a partisan Republican spending bill that continues to undermine their health care."

The core of the impasse lies in the fact that, despite Republicans holding a 53-47 majority in the Senate, any funding bill requires at least 60 votes to pass, meaning they must secure the support of at least seven Democratic senators. With the two parties still deeply divided, the prospects for reaching a consensus are slim.

Trump's tough stance heightens the risk of a shutdown.

The White House has shown no willingness to compromise, further exacerbating market concerns.

White House Press Secretary Karoline Leavitt stated in a media interview earlier on Monday (September 29) that Trump has "leverage" and is not interested in compromise. "The leverage is in the president's hands," she said, "because the vast majority of the American public wants the government to remain open."

Trump himself expressed pessimism in a phone interview with the media on Sunday evening, saying, "I just don't know how we're going to resolve this." The impasse is reminiscent of the 2018-2019 government shutdown during Trump's first term, which resulted in a 35-day shutdown, the longest in U.S. history, over funding for the U.S.-Mexico border wall.

More significantly, the White House seemed to suggest last week that the shutdown might involve more than just temporary furloughs of non-essential government employees. A memo distributed by the Office of Management and Budget late Wednesday (September 24) instructed federal agencies to "use this opportunity to consider layoffs" or permanent layoffs.

Gold prices hit new highs as risk aversion intensifies

The political deadlock in Washington has directly translated into safe-haven demand in the market. On Monday (September 29), gold prices broke through $3,800 per ounce, becoming the preferred hedge against dollar risk and US political uncertainty.

Gold prices have risen 45% so far this year, driven by factors beyond simple short-term risk aversion. Analysts point to rising government debt, persistent inflation, and doubts about the dollar's status as the world's primary reserve currency as fundamental factors supporting gold's long-term strength. The looming government shutdown has served as the catalyst for the latest surge.

The rally has also been fueled by a combination of institutional and central bank buying.

Deutsche Bank analysts noted in a report that the recent surge in gold prices is driven by buying from both ETF investors and central banks.

Data shows that Western investors are pouring into gold ETFs. According to the World Gold Council, inflows into gold-backed ETFs have been positive for four consecutive weeks, with September's inflows approaching 100 tons, the fastest monthly growth rate since April. John Reade, senior market strategist at the World Gold Council, noted that some hedge funds that missed out on the gold price rally are experiencing a sense of fear of loss (FOMO) and are starting to chase the rally.

Meanwhile, speculative investors, primarily hedge funds, are also increasing their bullish positions. According to the latest data from the U.S. Commodity Futures Trading Commission (CFTC), their net long gold positions have reached a record $73 billion.

Michael Haigh, head of commodities research at Societe Generale, said: "They haven't reduced these positions because recent policy speeches and inflation data point to lower interest rates and sustained inflation." Central banks around the world have also been increasing their gold reserves this year, viewing it as an effective hedge against dollar risk, providing solid structural support for gold prices.